Trends In Health Tourism, Buying And Selling Of Health Services And Movement Of Healthcare Workers

January 22, 2009 at 2:00 pm Leave a comment

The worldwide trends in trade of health-related services are looked at in detail in the fourth paper in The Lancet Series on Trade and Health, written by Professor Richard Smith, London School of Hygiene and Tropical Medicine, UK, and colleagues. In their analysis, the authors use the classification provided by the WTO for the General Agreement on Trade and Services (GATS): cross-border supply of health services, consumption of services abroad, foreign direct investment, and movement of health professionals.

Cross-border supply of health services (mode 1) does not receive much media attention, but many countries have invested heavily in this area. Teleradiology, for example, has benefited from the shift from hard copy to digital imaging. India, the Philippines, and Cuba are leaders in the exportation of medical-transcription services, telepathology, and telediagnostic services. The authors say: “Demand for cross-border e-health is related to cost and, to a lesser extent, timing. For instance, the yearly salary for US non-specialised radiologists is $300 000, but only $20 000 for their Indian counterpart.” But e-health brings its share of concerns as well as benefits. Who is legally liable when there are problems? And concerns have been raised about care becoming fragmented and disintegrated when e-services are used in this way.

Private patients seeking healthcare abroad (mode 2) “health tourism” is becoming big business. Thailand is the leading exporter at over 1 million patients per year and revenues of $615 million, but India is predicted to have revenues of $2•2 billion, Singapore $1•6 billion, and Malaysia $590 million by 2012. The demand for services abroad is driven by domestic non-availability, often in specialised and niche or alternative treatment areas. Low labour costs combined with high-quality medical professionals (many of whom trained in the USA or UK) give many developing countries a huge cost advantage. And it is not, as often thought, just cosmetic procedures that are ‘selling’. Heart-bypass surgery can be performed in Thailand for US$8,000, compared with $20,000 in the UK and $24,000 in the USA. The average cosmetic surgery comes in at around $3500 in Thailand,$10,000 in the UK and $20,000 in the USA. The potential for expansion of this trade is enormous. The authors say: “The main constraint on trade is the scarcity of insurance portability. Many national insurance schemes restrict patients seeking foreign service providers when that service is available domestically. In the European Union (EU), for example, although there is portability across member countries for emergency care, elective care needs previous approval from domestic health authorities.”

Foreign direct investment (FDI – mode 3), typically in new hospitals or clinics, has grown rapidly. Between 1990 and 2000, FDI from developed to developing countries grew from US$36 billion to $155 billion (over three-times that of official development aid) and FDI in services accounted for more than half of all FDI. However, FDI in health remains small compared with other sectors, because of the nature of the services (many health facilities are publicly owned) and the existence of regulatory barriers. Developing countries are increasingly looking towards FDI as a source of capital investment in their health sector, as well as the potential for general infrastructure development, and investment in and transfer of technology and skills. But concerns exist about foreign control of health-care provision; increased privatisation of health (in mainly public systems); and associated concerns about the diversion of resources to curative and high-end procedures, domestic brain drain, and advantageous patient selection.

Migration (mode 4) has historically been the main pathway for health-services trade. Currently around 30% of UK doctors are of foreign origin, with India, Ireland, Pakistan, South Africa and Egypt providing the majority of these. In the USA, Canada and Australia around 20% of doctors are foreign; many of whom are from the UK. Loss of doctors from poorer countries has a disproportionate effect on the national stock of skills in those nations. For nurses, low- and middle-income countries provide the majority of foreign nurses working in the UK – in 2002, around half of the 25,602 work permits issued to foreign workers for nursing were to nurses from The Philippines or India. Job satisfaction, pay and career opportunities are among the reasons healthcare workers wish to migrate. The authors say: “However, the effect of migration on human capital stocks (so-called brain drain) is a cause of concern. The ultimate destination of workers to rich countries, and often the private sector within these countries, has knock-on effects down the chain to public sectors within wealthy nations, private and public sectors in low-income countries, and ultimately the rural areas within poorer countries.”

The authors conclude: “Perhaps because health care is fundamentally about people-health professionals and patients-that modes 2 and 4 of service delivery are the most prevalent and arguably most important areas of trade in health services is unsurprising.”

“No universal policy recommendation can be made concerning a country’s involvement with trade in health services. Instead, every country needs to assemble the relevant information to assess how such trade can affect its key areas of concern… The stewardship of a domestic health system in the context of the trade environment in the 21st century needs a sophisticated understanding of how trade in health services affects, and will affect, a country’s health system and policy.”


Tony Kirby

Press Officer

The Lancet

32 Jamestown Road






Entry filed under: Uncategorized.

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